The Canadian government has several programs in place to provide income for its citizens during retirement. The Canada Pension Plan (CPP, a key source of retirement income for many Canadians) and Old Age Security (OAS) are probably the best known of them. A lesser-known benefit is the federal Guaranteed Income Supplement (GIS).
What is GIS in Canada?
With the government providing CPP, OAS and the federal Guaranteed Income Supplement (GIS), it can be confusing knowing what they are and how they differ. Not surprisingly, many people wonder, what is the Guaranteed Income Supplement and how does it fit in with the CPP and OAS?
- The amount of Canada Pension Plan that you’ll receive depends on how much you’ve contributed to the plan during your working life.
- The amount of OAS you’ll receive depends on how many years you’ve lived in Canada since you turned 18.
So how does GIS in Canada fit in?
- The Guaranteed Income Supplement in Canada is a monthly, non-taxable benefit given to low-income retirees aged 65-plus.
What is GIS in Canada for? It is designed to help Canadian retirees who have a low income. Retirees who qualify for GIS in Canada receive their first payment the first month after their 65th birthday. The OAS and Guaranteed Income Supplement in Canada are closely connected: you won’t receive any GIS in Canada if you don’t also receive OAS.
Who is eligible for the Guaranteed Income Supplement in Canada?
Guaranteed Income Supplement eligibility (GIS eligibility) requires that you are:
- Aged 65-plus
- Eligible for and/or receive OAS
- A Canadian resident
- Have income (or combined income if you have a spouse) below the appropriate threshold
GIS eligibility is restricted to people with very low income. What is the maximum income to qualify for GIS? The amounts involved are outlined in the next section, but in general Guaranteed Income Supplement eligibility cuts off currently at under $45,000 per couple and under $25,000 for single retirees.
What is the maximum income for GIS?
When applying for the GIS pension, it will save you time if you first find out if your income is too high. For couples (married or common-law) GIS eligibility is based on your combined income, and for single people the GIS pension eligibility is based on your income alone. Below are the most recent GIS eligibility thresholds:
- What is the maximum income to qualify for GIS if my spouse receives the full OAS pension? $24,768
- What is the maximum income to qualify for GIS if my spouse doesn’t receive the full OAS pension? $44,928
- What is the maximum income to qualify for GIS if my spouse receives the Allowance?* $44,928
- What is the maximum income for GIS if I am single, widowed or divorced? $18,744
* The Allowance is a benefit for low-income Canadians aged 60-64 whose spouse receives GIS in Canada.
What are the benefits of GIS?
For low-income retirees, the Guaranteed Income Supplement in Canada can provide a much-needed addition to their retirement income. If you have income below $24,768, any extra cash is a very welcome boost. And because it’s not taxable, it shouldn’t affect any other benefits you might qualify for.
How much GIS will I get?
As with OAS payments, GIS payments are reviewed in January, April, July and October, to make sure they keep up with inflation. Increases are measured by the Consumer Price Index: monthly payments increase if the cost of living goes up but are not reduced if the cost of living goes down. Below are the most recent maximum monthly GIS payments:
- How much GIS will I get if my spouse receives the full OAS pension?
$556.04 monthly maximum
- How much GIS will I get if my spouse doesn’t receive the full OAS pension?
$923.71 monthly maximum
- How much GIS will I get if my spouse receives the Allowance?
$556.04 monthly maximum
- How much GIS will I get if I am single, widowed or divorced?
$923.71 monthly maximum
How to calculate the Guaranteed Income Supplement
GIS payments are based on your income. Each income range has a different amount of GIS, so when looking at how to calculate the Guaranteed Income Supplement, it can get quite complicated. Before applying for GIS, it is worth visiting the Government of Canada webpage and clicking on “Select your annual income range”, either beneath single person or married/common-law.
Next, click on the relevant income range and you will be taken to a page where you can find your exact income. Next to this figure will be displayed the monthly GIS you’ll receive (if you also receive the maximum OAS) plus your combined OAS and GIS monthly payment.
What is the GIS application process?
Applying for the GIS is not always necessary, but you must have applied for and qualified for the OAS first. Many Canadians will receive a letter from the federal government, informing them of when they will start to receive the GIS, in which case a GIS application is not necessary.
If you don’t receive the letter soon after you turn 64, you may have to submit a GIS application. The Government of Canada GIS webpage provides all the information you need to submit a GIS application.
When can your GIS payments stop?
There are several reasons why your GIS payments could be reduced, stopped or held back:
- If you don’t file your taxes by April 30 every year
- You leave Canada for more than six months
- Your income increases
- You are sentenced to a federal prison term of two years or more
- Your marital status changes
- You or your spouse dies
Other ways to increase your retirement income
What is GIS likely to mean to your retirement income? It will provide you with either a maximum of $923.71 per month if you’re single/your spouse doesn’t receive the OAS pension, or a maximum of $556.04 per month if your spouse receives the OAS/the Allowance.
Those maximum amounts, however, pretty much require you to have very little other income. Ultimately, if you rely on the GIS pension, your total monthly income will probably mean that you’re having a financially difficult retirement.
If you’re a Canadian aged 55-plus and own your own home, there could be another way to supplement your retirement income so that it is at a far more manageable level. A CHIP Reverse Mortgage from HomeEquity Bank allows you to cash in up to 55% of your home’s appraised value in either one tax-free lump sum or regular monthly payments.
Because a reverse mortgage is not classed as income, it won’t have a negative impact on your GIS or other government benefits. Plus, you won’t have to make any regular mortgage payments — you only pay back what you owe when you sell your home or move out.
Call us today at 1-866-522-2447 to find out how much you could borrow, so you can start having a more comfortable and less financially stressful retirement.